1. Field of Art
The disclosure generally relates to the field of electronic commerce.
2. Description of the Related Art
Rewards or loyalty programs associated with purchase of goods or use of certain payment sources have become commonplace. For example, several airline operators offer loyalty miles for flying with the operator which can be redeemed or used towards another flight operated by the same carrier. Credit card companies such as Discover Inc. or American Express Inc. offer loyalty points for each dollar spent using their credit card. Additionally, each rewards or loyalty points program also operates a redemption store. Redemption stores generally allow customer (or user) with accumulated points to redeem their points in exchange for one or more items.
Loyalty program providers generally offer reward programs to retain their customer base and increase customer engagement with the program provider. However, loyalty program customers often cannot redeem their points because the customers may lack sufficient points for a particular item, the rewards program operator may not offer items the customers want or the customers may not know how to redeem their points. Thus a large amount rewards points offered through rewards programs or loyalty programs remain unclaimed and unused. Additionally, the process of redemption is generally cumbersome; it requires customers to track points, redemption rates, expiration dates associated with the points and redemption stores. Over time, the customers often become dissatisfied with the cumbersome redemption process, which reduces the perceived value of the loyalty points. Thus, the loyalty program operators are generally unsuccessful in increasing customer engagement with the rewards program or retaining a customer base.
For loyalty program operators the experience also can be less than satisfactory. Loyalty program operators are often forced to carry a balance roughly equivalent to the market value of the outstanding loyalty points on their balance sheets, through the use of loyalty reserve accounts. Loyalty reserve accounts represent real liability and not contingent liability. Thus, the loyalty program operators are forced to carry funds which could otherwise be used for other business objectives such as marketing, business development, etc. Accordingly, loyalty program operators attempt to move these redemption points off their operating balance sheet as fast as possible, but must be careful not to raise the ire of their customer base.